diff --git a/crates/nu-command/src/system/exec.rs b/crates/nu-command/src/system/exec.rs
index 8a2b24a113..ca0ae4d216 100644
--- a/crates/nu-command/src/system/exec.rs
+++ b/crates/nu-command/src/system/exec.rs
@@ -61,6 +61,16 @@ On Windows based systems, Nushell will wait for the command to finish and then e
         let envs = env_to_strings(engine_state, stack)?;
         command.env_clear();
         command.envs(envs);
+        // Decrement SHLVL as removing the current shell from the stack
+        // (only works in interactive mode, same as initialization)
+        if engine_state.is_interactive {
+            let shlvl = engine_state
+                .get_env_var("SHLVL")
+                .and_then(|shlvl_env| shlvl_env.coerce_str().ok()?.parse::<i64>().ok())
+                .unwrap_or(1)
+                .saturating_sub(1);
+            command.env("SHLVL", shlvl.to_string());
+        }
 
         // Configure args.
         let args = crate::eval_arguments_from_call(engine_state, stack, call)?;
diff --git a/tests/shell/environment/env.rs b/tests/shell/environment/env.rs
index 7e628a92e7..eab193684f 100644
--- a/tests/shell/environment/env.rs
+++ b/tests/shell/environment/env.rs
@@ -229,3 +229,23 @@ fn std_log_env_vars_have_defaults() {
     assert!(actual.err.contains("%MSG%"));
     assert!(actual.err.contains("%Y-"));
 }
+
+#[test]
+fn env_shlvl() {
+    let actual = nu!("
+        $env.SHLVL = 5
+        nu -i -c 'print $env.SHLVL'
+    ");
+
+    assert_eq!(actual.out, "6");
+}
+
+#[test]
+fn env_shlvl_in_exec() {
+    let actual = nu!("
+        $env.SHLVL = 29
+        nu -i -c \"exec nu -i -c 'print $env.SHLVL'\"
+    ");
+
+    assert_eq!(actual.out, "30");
+}